Low-Income Loans

It's a common misconception that loans are only for borrowers with sizeable incomes and excellent credit scores. While this may be the case when it comes to traditional financing, there are plenty of loan options available to almost everyone, regardless of income or credit history.

And yes, that includes people with low incomes!

What are low-income personal loans?

Low-income loans cater to borrowers with a lower-than-average income. While not all lenders offer low-income loans, many online lenders like Advance America do.

Whether or not you fall into the category of "low income" will vary from one lender to another, as each company will have different standards.

How do low-income loans differ from other loans?

There are several different types of low-income loans, each being slightly different from the rest. In general, these loans are very similar to loans for people with more sizeable incomes. The difference is that people with a lower income typically qualify for smaller loan amounts, and the repayment terms may be different.

Why are loans more difficult to get with a low income?

When a lender issues a loan, they do so with the expectation that the borrower will repay the debt in full. Therefore, the more money someone already has, the more likely they'll be able to repay the loan plus any interest and fees.

As a result, lenders are more hesitant to give loans to people with a lower income because they simply have less money to budget for payments.

Different types of low-income personal loans

Here are some of the most common types of loans available to people who may have low incomes.

Cash Advance or Payday Loans

A Cash Advance or Payday Loan is an unsecured personal loan that doesn't require collateral or a credit check. These loans are small, usually no more than $500 to $1,000, depending on your income. Since they’re based on how much you bring home every payday, your income serves as proof of your ability to repay.

It’s important to note that Payday Loans are designed to be repaid in full on your next payday. As with any type of loan, if you can’t afford to make your payment on time, you could face additional fees and penalties.

Installment Loans

If you need a slightly larger amount of money, an Installment Loan can be a good option. Installment Loans are typically given in a lump sum and can be anywhere from several hundred to several thousand dollars.

While Installment Loans don't necessarily require a sizeable income, they may require a good credit score or proof of a stable income, depending on your lender. If approved, you will repay the loan through monthly payments that you and your lender will work out together.

Lines of Credit

For a more flexible loan option, consider opening a Line of Credit. A personal Line of Credit is a loan that works a little like a credit card. Essentially, you’re approved for a set credit limit or “credit line,” and you can draw money from it as needed without going over your credit limit.

The great thing about a Line of Credit is that you only pay interest on money you withdraw, not the entire amount you’re approved for. This can give you more control and flexibility over other types of low-income loans.

Emergency loans

Many lenders specializing in low-income loans offer various types of emergency loans, which can give you the money you need when you’re in a pinch and facing unexpected expenses. Depending on the lender, the types of emergency loans offered might include Payday Loans, Installment Loans, Lines of Credit, and other personal loans.

Pawn shop loans

You might opt for a pawn shop loan if you don't have access to a credit union or bank loan, or if you own a valuable item worth pawning. Most local pawn shops offer pawn shop loans, and they typically don't do background checks or inquire about your income.

The downside of pawn shop loans is that they tend to have higher interest rates, and you could end up losing a sentimental item if you can't repay the loan and reclaim your collateral.

How to qualify for a low-income loan

If you're living paycheck to paycheck and don't have a sizeable income right now, here's how you might qualify for a low-income personal loan.

Improve your credit score

Since your credit score indicates your ability to repay debts on time and in full, the first step to receiving any type of loan is to work on boosting your credit score. When you have a good credit score, a lender may not worry as much about your total income.

Apply for a secured personal loan

If you don't qualify for an unsecured low-income loan, you may be able to get a secured personal loan. With this type of loan, you offer something as collateral to the lender in case you can't repay the loan amount. Pawn shop loans and title loans are examples of secured personal loans.

Get a co-signer

Another option is to enlist the help of a co-signer with a more significant income or better credit score. Having a reputable co-signer will increase the odds of getting a loan when you have a low income.

Include all sources of income

Lenders consider your total income when approving you for a loan. Depending on the loan, you might be able to list any assets – such as savings or real estate – in addition to your pay when you apply.

Consider smaller loans

If you have a low income, looking for smaller loans is smart for two reasons. First, they're likely the only types of loans you'll qualify for. Second, you'll be more capable of repaying the loan because a smaller amount is easier to budget on a low income.

Alternatives to low-income loans

If you don't qualify for low-income loans or want to avoid going into debt, here are some alternatives:

Prioritize savings

The more money you can put into your savings account, the more likely you’ll be able to repay any future loans you might qualify for.

Government benefits and assistance

Depending on your income level and employment status, you may qualify for government benefits or assistance programs. Explore Benefits.gov to see what programs you might be able to utilize.

Focus on budgeting

In addition to saving money, it's a good idea to create a budget and stick to it. Check out our Budgeting Tips for more information.

Look for community assistance

If you don't qualify for government benefits, you might seek financial hardship assistance from your local community. Search for local food banks, charities, and public assistance services near you.

Reach out to friends and family

It’s not easy to swallow your pride and ask for help, but it’s sometimes necessary. Even if they’re not able to provide monetary help, friends and family may be able to offer occasional childcare, food, or transportation.

Try a side gig

Starting a side gig in your free time has become a popular way to earn extra cash and supplement your regular income.

Apply for a low-income loan from Advance America

It can be challenging for low-income borrowers to find the right loan to meet their needs. That’s why we offer several personal loan options for all types of borrowers.

Apply for a low-income loan online or at your nearest Advance America location, and we'll be happy to work with you to find the best financial solution!

The Advance America advantage

Since 1997, Advance America has helped millions of hardworking people with a variety of financial solutions including Payday Loans, Online Loans, Installment Loans, Title Loans and Personal Lines of Credit.
148+ million
loans issued
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and online loans
25+ years
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